/** blogpostTitle: "Finolex Cables Q1 FY27: Strong start, but watch fibre margin normalisation" */

Finolex Cables Q1 FY27: Strong start, but watch fibre margin normalisation

Finolex Cables began FY27 with a strong June quarter, helped by a mix of higher commodity pass-through, genuine volume growth in several electrical cable categories, and an unusually profitable quarter in communication cables.

Standalone revenue for Q1 FY27 was INR 2,013 crore, up 44% year on year. Standalone EBITDA (excluding other income) rose to INR 248 crore and PAT came in at INR 221 crore. Management attributed the revenue surge partly to higher copper prices being passed through, but also pointed to volume-led momentum in automotive, solar, agricultural and industrial applications.

The quarter also carried a clear message on sustainability. Communication cable margins were elevated due to the consumption of lower-cost fibre inventory and export-led opportunities, and management explicitly guided that margins should settle down as new, higher-cost raw material is consumed.

What changed in the revenue mix

The revenue mix stayed heavily tilted toward electrical cables. In Q1 FY27, electrical cables contributed 88% of revenue, while communication cables contributed 9%. The remaining 3% came from the Others bucket, which mainly comprises trading of electrical and other goods.

Electrical cables revenue grew 47% year on year to INR 1,767 crore. The company stated that price increases from raw material inflation were passed on during the period, and that volumes were strong in auto, industrial, agriculture and solar applications.

Communication cables revenue rose 62% year on year to INR 176 crore. Management said optic fibre cable volumes were significantly higher than the previous year and realizations were also higher. This led to a sharp improvement in profitability in the segment.

The Others segment reported INR 61 crore of revenue in Q1 FY27 and was described as impacted by disturbances in West Asia, which caused supply chain disruptions and lower fuel availability. Management also noted continued price erosion in lighting.

Financial summary (Standalone)

Electrical cables: volume growth beyond building wires

Management commentary suggests the electrical business is seeing mix improvement. The CEO highlighted high double-digit volume growth in categories such as automotive cables, battery cables, flexible wires, solar and agricultural applications. In contrast, building wire volumes were broadly stable with low single-digit growth.

A key operational detail was channel inventory. Management said channel inventory, especially in building wires, was low at the end of the quarter and the quarter saw a destocking at the channel. This is relevant because it explains why some parts of the portfolio did not show high volume growth even as other segments expanded strongly.

The quarter was not free of disruption. The company referenced supply chain issues after March related to fuel availability and PVC availability. It said it managed these changes, though at higher costs, and was largely able to pass on the cost increases to the end customer.

Communication cables: strong quarter, but management flags normalisation

Communication cables were the standout this quarter, but also the segment with the strongest cautionary note.

Management linked the margin spike to two factors. First, fibre prices had risen sharply over the last several months. The CEO explained that standard fibre prices (G.652.D) had moved from roughly USD 5 to 6 in December to as high as USD 17 to 18 in recent months, before settling around USD 12 to 13 per kilometer at the time of the call. Second, Finolex had raw material inventory sourced earlier at lower prices, which benefited margins when sales were booked at current market realizations.

The company therefore expects margins to settle down once older inventory is consumed and higher-cost material is used. Management said the segment should still remain in double digits, but that Q1 levels are not sustainable over the long term.

Exports played a meaningful role in the quarter. Management reported total exports of about INR 50 crore in Q1 FY27, almost equal to the entire value of exports in the prior year. Within communication cables, exports were about INR 35 to 40 crore, mainly to the US and Europe. The CEO also cautioned that export opportunities are not guaranteed every quarter because deal cycles and shipping schedules can vary.

Capacity expansion and backward integration: the FY27 operating agenda

The most concrete strategic updates were in the communication cables value chain.

The company confirmed that preform production has commenced and it is working toward stabilising the new plant over the next couple of months. While the investor presentation framed preform manufacturing as a step that reduces supply chain dependence and import exposure, management clarified on the call that the intent is to use preform captive for drawing fibre and manufacturing cables, not to sell preform externally.

On capacity, Finolex has accelerated its fibre draw expansion. Instead of a phased ramp from 4 million to 6 million and then 8 million kilometers, management decided to expand from 4 million to 8 million kilometers in one go due to a global fibre shortage and the demand pull from data centers, AI-driven usage, and telecom. The management indicated that the full 8 million kilometer draw capacity is expected to be ready by end of Q2 FY27 and also stated it would happen by September.

Management also noted that the current 100-ton preform facility is equivalent to roughly 4 million kilometers of fibre, which means the company will still need to procure preform externally to support an 8 million kilometer draw level.

Overall capex guidance for FY27 was reiterated at approximately INR 300 crore.

What to track from here

Finolex Cables delivered a clean quarter on revenue and profitability, but the discussion also made it clear what the market should not extrapolate.

Communication cables profitability benefited from timing effects and exports, and management expects normalisation. At the same time, the company is responding to the opportunity by accelerating draw capacity expansion and stabilising backward integration through preform manufacturing.

On the electrical side, the growth narrative is shifting toward auto, solar, agricultural and industrial applications rather than depending only on building wires. Channel inventory dynamics and commodity pass-through will continue to influence reported growth rates quarter to quarter.

The next few quarters will likely be defined by two questions. One is how quickly the expanded fibre draw capacity translates into sustained utilisation and revenue. The other is where communication margins settle once raw material cost resets. The company has acknowledged both points upfront, which makes the coming quarters easier to judge against management’s own commentary.